Private health insurance brings peace of mind to people, as it ensures that money will not be a barrier to treatment for you or your family members during a health emergency. However, it can only happen when you choose the right private health insurance policy, checking all exclusions and inclusions carefully.
Even a minor mistake in selecting the right policy can prove costly during a health emergency. Buyers, especially first-timers, should understand the policy terms and conditions. Moreover, it is crucial to understand the common reasons why many private health insurance claims get declined.
The Reasons Behind Insurance Claim Rejections
There could be multiple reasons behind private health insurance claim rejections. From lapsed policies to insurer misconduct, numerous instances exist behind insurance claim rejections. For example, let us analyse the case of Bupa misconduct that has had a significant impact on four thousand Australians.
As per the reports, Bupa, recognised as one of the largest private health insurers in Australia, has rejected thousands of claims incorrectly between 2018 to 2023. Upon verifying the complaints against the insurance provider, the ACCC (Australian Competition and Consumer Commission) imposed a penalty of $35 million.
The case of Bupa clearly suggests that choosing the right private health insurance policy is not enough. Buyers need to understand the terms and conditions properly. Moreover, it is also crucial to avoid certain costly mistakes that could potentially lead to a claim denial. In the following section, find the most common reasons why private health insurance claims have been declined.
1. Lapsed or Inactive Policy
If your premium isn’t paid on time, your policy may become inactive without you realising it. Any claim made during this inactive period is likely to be rejected, even if you were just a few days late on payment. Set calendar reminders or opt for automatic payments to ensure your coverage stays uninterrupted.
2. Waiting Period Not Completed
All private health insurance policies have waiting periods—the time you must hold the policy before you can claim for certain treatments. For example, there’s typically a 12-month waiting period for pre-existing conditions and pregnancy-related services. Claim rejection is common when treatment is scheduled before the waiting period ends—even if the procedure itself is medically necessary.
3. Service Not Covered by Your Policy
This is one of the most frequent causes of claim denial. Many policyholders assume their insurance covers all hospital or medical services—but that’s rarely the case. For example, if you have a Basic or Bronze hospital cover, procedures like cataract surgery or joint replacements may not be included. Review your product disclosure statement (PDS) and ask your insurer for a written list of what’s included under your current tier (Basic, Bronze, Silver, Gold).
4. Incorrect or Incomplete Paperwork
Even a minor clerical error—like a misspelt name, wrong item code, or missing referral letter—can delay or void your claim. Additionally, services provided by practitioners who aren’t recognised by your insurer can trigger automatic denial. Always double-check all claim documents before submission. If unsure, call your insurer and ask for a checklist of required documents.
5. Pre-existing Condition Not Properly Assessed
If a condition is classified as pre-existing, insurers may deny the claim unless the waiting period has been served. However, the process of determining what qualifies as a pre-existing condition can be opaque.
In fact, a 2019 report by The Guardian revealed that some major insurers rejected claims without obtaining mandatory medical assessments—a direct breach of regulations. Ask for the insurer’s medical practitioner’s report if your claim is rejected due to a pre-existing condition. You’re entitled to review it and seek a second opinion.
6. Mixed-Coverage Confusion
In some procedures, only part of the service is covered under your policy. A common example is when the hospital charge is covered, but the surgeon’s or anaesthetist’s fee exceeds the “known gap” amount. Insurers should pay the covered portion, but sometimes they reject the full claim due to misclassification.
As seen in the Bupa case, over 4,000 customers were affected by such mixed-coverage denial errors. Ask your hospital or provider for a fully itemised invoice and confirm with your insurer exactly what portion is covered before undergoing the procedure.
7. Claim Submitted After the Deadline
Most private health insurers in Australia allow claims to be lodged within two years of receiving a service. However, delays in submitting documents or failing to respond to information requests within their stipulated timeframe can result in rejections. Lodge your claim as soon as possible after the treatment. If you’re unable to submit it immediately, notify your insurer so they can make a note on your file.
Quick Checklist to Avoid Claim Denials
- Check your waiting periods before scheduling treatment
- Confirm the service is covered in your policy tier
- Use recognised providers
- Submit claims promptly with correct documents
- Keep a copy of all communication with your insurer
Final Thoughts: Be Proactive, Not Reactive
Private health insurance can be a financial safety net—but only if used wisely. Take time to understand your policy’s coverage, restrictions, and processes. Keep a record of communications and never hesitate to ask for clarification when needed.
Searching for the best private health insurance plans? From single health insurance policies to the plans for couples, Compare Your Health provides a detailed guide on different types of private health insurance policies from reputed insurers in Australia. Consult us to pick the best insurance policy that minimises the risk of claim decline.